Economics & Business Faculty Work

Title

Law and Credit Constraints in Transition Economies

Document Type

Article

Publication Date

2012

Publication Title

Economics of Transition

Volume Number

20

Issue Number

3

DOI

10.1111/j.1468-0351.2012.00438.x

Abstract

Using a survey of over 4,000 firms in 21 transition economies, this paper investigates how legal extensiveness (law on the books) and legal effectiveness (law in practice) affect availability of bank finance. Our findings suggest that both law on the books and law in practice are important, but that they impact firms of different sizes differently. Small firms appear to be the most credit constrained in countries with weak creditor rights and with weak contract enforcement, while large firms are the most credit constrained in countries with weak courts and unclear and inconsistent laws pertaining to firms’ business operations.

ISSN

0967-0750

First Page

425

Last Page

455

Link Out URL

https://doi.org/10.1111/j.1468-0351.2012.00438.x

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